Which method converts a single year's expected income into a market value?

The method that converts a single year's expected income into a market value is direct capitalization. This approach is commonly used in real estate appraisal to determine the value of an income-producing property based on its ability to generate income.

In direct capitalization, the appraiser typically takes the expected net operating income (NOI) for one specific year and divides it by a capitalization rate. The capitalization rate reflects the return on investment that an investor would expect from a similar property, serving as a benchmark to evaluate the risk and return associated with the property.

This method is straightforward and provides a quick estimate of value, making it especially useful for properties with stable income streams. It contrasts with other methods like discounted cash flow analysis, which factors in income over multiple years and adjusts for the time value of money, or yield capitalization, which takes into account the overall yield from the investment over a period of time.